Nationwide Mutual Ins Co. v. Fred Baptist

Case: 13-60726 Document: 00512726469 Page: 1 Date Filed: 08/07/2014
IN THE UNITED STATES COURT OF APPEALS
FOR THE FIFTH CIRCUIT
United States Court of Appeals
Fifth Circuit
No. 13-60726 FILED
August 7, 2014
Lyle W. Cayce
NATIONWIDE MUTUAL INSURANCE COMPANY, Clerk
Plaintiff-Appellee
v.
FRED L. BAPTIST; DEBBIE BAPTIST,
Defendants-Appellants
Appeal from the United States District Court
for the Northern District of Mississippi
Before STEWART, Chief Judge, and WIENER and COSTA, Circuit Judges.
PER CURIAM:
In this diversity case applying Mississippi insurance law, Defendants-
Appellants Fred L. and Debbie Baptist appeal the district court’s summary
judgment in favor of Plaintiff-Appellee Nationwide Mutual Insurance
Company (“Nationwide”). The district court held that the Baptists initially
purchased a valid homeowner’s insurance policy from Nationwide, but that
subsequent renewals of that policy were void ab initio because they occurred
after the Baptists lost ownership of their home to foreclosure.
The parties do not dispute the relevant facts. The Baptists purchased
the Nationwide policy in October 2006. Just over two years later, in November
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No. 13-60726
2008, they lost their home to foreclosure. They did not inform Nationwide of
the foreclosure sale, however, and they continued to occupy in the home. 1 The
Bank of New York, which had purchased the home at the foreclosure sale,
sought and obtained a judgment evicting the Baptists on December 9, 2011.
That should have caused the Baptists to vacate the home by January 13, 2012,
but it was seriously damaged by a fire or fires on December 27 and 28, 2011. It
was in conducting a post-loss investigation of the Baptists’ claims arising from
these fires that Nationwide first discovered that they no longer held title to the
property.
After losing their home to foreclosure, but prior to Nationwide’s
discovery of that fact more than two years later, the Baptists twice renewed
their homeowner’s insurance policy, first for 2009-2010, and again for 2010-
2011, by sending Nationwide checks to cover each annual premium. In addition
to the claims relating to the December 2011 fires, the Baptists also filed post-
foreclosure claims relating to wind or hail damage, and to an unrelated fire, in
April and May of 2010, respectively.
Nationwide filed suit in the United States District Court for the
Northern District of Mississippi seeking (1) a declaratory judgment that the
policies issued after the foreclosure sale were void and (2) recovery of payments
it made on the Baptists’ claims filed in 2010 and 2011. Seeking summary
1 The Baptists sought to set aside the foreclosure by means of a complaint filed in the
United States District Court for the Western District of Tennessee, which that court, while
at the same time noting the possibility of a lack of jurisdiction and venue, dismissed for
failure to state a claim. Baptist v. Bank of New York Mellon, 09-2569-STA, 2010 WL 1539973(W.D. Tenn. Apr. 16, 2010). The Sixth Circuit’s unpublished November 2011 order affirming
that dismissal is a part of our record in this appeal.
2
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No. 13-60726
judgment, Nationwide insisted, inter alia, that the Baptists’ failure to inform
Nationwide of the foreclosure sale was a material misrepresentation sufficient
to void coverage. The District Court held that the Baptists “had no insurable
interest in the subject property at the time the renewal policies were issued[;]
the Baptists were therefore ineligible for such renewal policies[;] and[,]
consequently, the renewal policies are void.” The district court’s judgment
ordered the Baptists to reimburse Nationwide for all payments it made on
claims arising during the post-foreclosure renewal periods. The Baptists
timely filed a notice of appeal.
Although the parties devote much of their briefing to whether the
Baptists maintained an insurable interest in the property sufficient to sustain
their policy’s effectiveness after the foreclosure, we need not address this issue
to conclude that the district court’s judgment must be affirmed. Our de novo
review 2 satisfies us that the district court’s ultimate conclusion was correct
because, even assuming arguendo that the Baptists maintained an insurable
interest sufficient to sustain their policy—in their personal property,
contemplated as “contents,” for example—their renewals of their policy
constituted their affirmations to Nationwide of their initial application for
insurance, material portions of which were no longer true. The Baptists’
application reflects that the home would be owner occupied, and includes both
the Baptists’ declaration that the facts stated on the application are true and
their request that Nationwide issue “the insurance and any renewals thereof
in reliance thereon.” By renewing their homeowner’s policy when they no
2 Carroll v. Metro. Ins. & Annuity Co., 166 F.3d 802, 805 (5th Cir. 1999).
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longer owned their home, the Baptists made a misstatement of material fact
that entitled Nationwide to rescind the policy. 3 Accordingly, the judgment of
the district court is AFFIRMED.
3 See id. (“Under Mississippi law, if an applicant for insurance is found to have made
a misstatement of material fact in the application, the insurer that issued a policy based on
the false application is entitled to void or rescind the policy. To establish that, as a matter of
law, a material misrepresentation has been made in an insurance application, (1) it must
contain answers that are false, incomplete, or misleading, and (2) the false, incomplete, or
misleading answers must be material to the risk insured against or contemplated by the
policy. The party seeking to void the insurance contract . . . must establish the existence of a
factual misrepresentation and its materiality by clear and convincing evidence. Whether the
misrepresentation was intentional, negligent, or the result of mistake or oversight is of no
consequence.” (internal footnotes omitted)).
4